Talking Points:
- Risk aversion has continued to show as Japanese and European Equity bourses put in a bearish day of price action. That selling has continued through US equity futures, and as we approach the US open both the Dow Jones[1] and S&P 500[2] are nearing interesting areas of potential support. Given the backdrop for how this selling has developed since last week’s FOMC/ECB rate decisions, traders would likely want to be very careful with ‘buy the dip’ strategies until these support zones show some element of cauterization to prevailing selling pressure.
- Risk aversion has shown in the FX market as well. We looked at the short GBP/JPY[3] in our FX Setups for this Week[4] as a play on a continuation of risk aversion, and Yen-strength has remained fairly prominent in the early part of this week. That keeps the door open for a deeper bearish move in GBP/JPY as we approach the Bank of England rate decision on the calendar[5] for Thursday of this week.
- DailyFX Forecasts on a variety of currencies such as the US Dollar[6] or the Euro[7] are available from the DailyFX Trading Guides page[8]. If you’re looking to improve your trading approach, check out Traits of Successful Traders[9]. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide[10].
Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator[11].
Risk Aversion Continues Across Global Markets
